As a young person in the Financial Planning industry I am often asked the questions, when should I start planning, and how will you be able to help me?  In my opinion it is never too early to start!  This is not to say you need to implement a complex strategy, just to set yourself a solid foundation for the future.  Here are a few tips to get you started…

Know your budget.  Budget sounds like a dirty word, but it is not.  It is just being aware of what you are spending and not uttering the words ‘I don’t know where my money goes’.  NAB has introduced a fantastic tool that is attached to your internet banking called the Money Tracker.  And that is exactly what it does.  It records all your transactions going into and out of your account and tells you your net position over a period of time.  It even goes as far as to categorise the transactions to let you know how much you are spending in each area.  It allows you to set savings goals and will project when you can achieve them.  Other banking institutions will also have similar tools – go into your branch and ask!

Avoid bad debts.  Don’t spend beyond your means, this is what we call running straight to lifestyle spending via a credit card or personal loan and it only causes stress.  Some tips to avoid the strain caused by bad debts are to always pay your credit card off at the end of the month before you are charged any interest and if you have a personal loan or car loan pay off more than the minimum each month to clear this debt as soon as possible.

Start a savings plan.  If you notice you have surplus income, do something with it other than spending it.  Think about your goals, you may want to go on holidays, buy a new car or a house.  Start putting money away for this now and the best way is to have this come out of your account on a regular basis.  There are many options for high interest savings accounts, do your research and find the best one for you.  If your goal is to start investing speak to a Financial Planner about where and how to invest, most funds have the ability to set up a savings plan.

Now that you are an independent adult you need to think about personal protection.  What would happen if you were sick or injured and unable to work for a period of time?  How would you pay the bills? Would you have to look towards your parents to pay them?  It is your responsibility to ensure your most valuable asset, your income, is protected.

Consolidate your super.  It is common for young people to have more than one super account.  Generally they have low balances which are eaten away in fees.  This is your money for retirement.  Like the adverts say “ Super is real money” Consolidate your funds into one account and look at how it is invested, ensure it is an appropriate option as you will have your superannuation for a long time to come.

Finally, in our opinion, the best investment you can make is in yourself!  Is there is a course you have always wanted to do? Do it!!!  By investing in yourself and furthering your knowledge and expertise you are maximising your earning potential. You will then be able to seek that promotion at work you have been wanting or embark on the career change that you have been too scared to do.  Find a mentor and invest in your future.

By Elise Ryan – Associate Financial Planner

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.